Voters With Facts v. Eau Claire
Eau Claire is using TIF districts to hand millions of dollars to a private developer in order to build a new performing arts center and other buildings in its historic downtown district. TIF districts have become the favorite tool of crony capitalists to pay off well-connected business owners while making it “look” like taxes aren’t being spent. TIF districts were created by the legislature to permit cities to deal with truly run-down dumps by permitting those cities to borrow against the growth in tax revenue that development of such blighted areas would bring. But cities are first supposed to make sure that (1) the area is truly blighted, and (2) development wouldn’t happen in the area without the TIF district.
In Eau Claire, neither of those two things happened – the government officials merely reached those conclusions without actually seeing any evidence that they were true. On behalf of Voters With Facts, a group opposed to the project, and dozens of local property taxpayers, we sued to challenge two TIF districts.
The circuit court dismissed our case, concluding that the plaintiffs lacked standing (despite case law stretching back a hundred years permitting taxpayers to challenge the unlawful expenditure of tax dollars) and that it would be improper for a court to “second guess” a city’s decision to create a TIF district.
We appealed, and the appellate court partially reversed. The court agreed that the plaintiffs lacked standing, under a different theory than that used by the circuit court – that the plaintiffs were wrong on the merits and therefore lacked standing. However, the court also concluded that our alternative claim for certiorari review could survive.
The Wisconsin Supreme Court affirmed on different grounds, assuming that the plaintiffs had standing and concluding that nevertheless, taxpayers could only challenge TIF districts using the deferential certiorari review standard instead of via a declaratory judgment action. The court also upheld the city’s cash grant to the developer.
The case was remanded back to the trial court to resolve the certiorari challenge to the city’s blight and “but-for” findings.